The United States has subsidized the wind industry for 35 years. For the past 20 years, most of these subsidies have taken the form of a production tax credit, which provides wind-generation owners a 2.2 cent per kilowatt-hour (kWh) tax credit. The credit already has been extended by Congress five times. Now, Congress is considering whether to extend it one more year, at a cost to taxpayers of more than $12 billion. If so, the many will once again pay to benefit the politically connected few.
The wind industry says it needs more time to become fully competitive. Whether that’s true or not, one thing is certain: high-cost wind generation provides low-value electricity. On hot and humid summer days that Midwesterners well know, the demand for electricity peaks, because everyone is using air conditioners. But my analysis of four years of wind-generation data shows that, on those same days, wind blows the least. No wind, no wind power. For example, last July 6 the temperature hit 103 degrees in Chicago. Electricity demand skyrocketed. But that day, the 2,700 megawatts of wind turbines in Northern Illinois produced an average of just 4 megawatts of power, enough to power 4,000 Chicagoans’ blow dryers.
An analysis of four years of data from the Midwest, Mid-Atlantic and Texas, where more than half of the nation’s wind turbines are located, shows a disturbing pattern: wind turbines generate the most power when it is least needed – at night, and in the spring and fall – and the least amount of power in summer, when it is most needed. The data show that wind generation is available less than 15 percent of the time on the highest-demand days. That’s why wind power is “low-value.” It’s like a soda machine that works only if you are not thirsty.
Not only does subsidized wind provide low-value electricity, it is creating havoc for the entire electric system.
First, subsidized wind power is driving other, competing generators out of business. A business that faces an unfairly subsidized competitor eventually will fold. So, competitive generators lose money and shut down. That causes electric prices to go up again. Worse, after that, nobody wants to build unsubsidized generation, causing long-term reliability problems. After all, why invest if you’re just going to lose money?
Second, because wind is intermittent – nature does not guarantee when the wind blows – power-system operators must have enough power in reserve to make up for wind that doesn’t show up, costing more than $500 million per year, and increasing.
Third, because wind turbines are built in rural areas, huge transmission lines must be built to deliver wind power to customers in cities and towns. Those transmission lines cost billions of dollars.
The combined effect is that customers pay more and electric reliability suffers. In Texas, transmission lines built to accommodate subsidized wind will cost the average family more than $1,000. In a hearing this past September, Public Utility Commission of Texas Chairwoman Donna Nelson called for the end of federal subsidies, saying “The market distortions caused by renewable-energy incentives are one of the primary causes, I believe, of our current resource-adequacy issue.”
We hear a lot about the jobs created by wind subsidies and other stimulus programs, and, of course, it is indisputable that handing out more than $12 billion of your money will create some jobs. But because that the money comes out of your pocket, you have less to spend on the things you want. That means fewer jobs. Our government cannot subsidize its way to the long-term economic growth the country desperately needs. The math doesn’t work, nor does the flawed logic that we should continue to pay billions to build wind turbines that fail to produce power when customers most need it.
Jonathan Lesser is the president of Continental Economics, an economic and energy consulting firm in New Mexico.
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